Examining Nissan-Renault, Daimler deal

For 2010, U.S. dealers of the Daimler’s Smart brand offer only the two-passenger ForTwo model, which comes in hardtop and convertible versions.

For 2010, U.S. dealers of the Daimler’s Smart brand offer only the two-passenger ForTwo model, which comes in hardtop and convertible versions.

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For 2010, U.S. dealers of the Daimler’s Smart brand offer only the two-passenger ForTwo model, which comes in hardtop and convertible versions.

For 2010, U.S. dealers of the Daimler’s Smart brand offer only the two-passenger ForTwo model, which comes in hardtop and convertible versions.

Examining Nissan-Renault, Daimler deal

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The surprising partnership between Nissan-Renault and the German automaker Daimler announced recently in Europe will help expand the lineup of Daimler's Smart car brand here in the United States.

It also could bring new manufacturing business for Nissan's U.S. plants in Tennessee and Mississippi, where the Japanese automaker eventually could build electric cars and commercial vans for Daimler for sale in the United States and other markets.

The electric car would be based on the technology developed by Nissan and Renault, which will be rolled out later this year in the United States in the form of the Nissan Leaf, a compact all-electric car with an expected range of 100 miles between charges.

While officials of the Nashville-based Nissan North America Inc., would not speculate on what the newly forged alliance might mean in the way of additional work for its U.S. plants, the agreement does make provisions for Nissan-Renault to share its fledgling electric-vehicle technology with Daimler and for the two companies to share engines, transmissions and other components across their product lines.

The electric cars for Daimler eventually could come from the Nissan factory near Nashville; and a new line of light commercial vans for Daimler eventually could be produced in Nissan's Mississippi factory, which already is being retooled to build the commercial vehicles Nissan will introduce here later this year.

Earlier this year, Nissan unveiled its versions of those vans, the NV, which are built on the same chassis as the Titan pickup and Armada sport utility vehicle.

For the Smart minicar brand, Renault and Daimler jointly will develop the next generation of the ForTwo model, as well as a new four-passenger version. Both are scheduled to arrive for 2013.

U.S. Smart dealers say they're eagerly awaiting the new four-passenger model, which Daimler originally had planned to offer as its first U.S. Smart vehicle about five years ago.

Those plans were canceled; and in 2007, Daimler introduced the Smart ForTwo in the United States through an independent distributor owned by the Penske company.

Dealers say they desperately need a Smart with a back seat for customers who like the styling and great fuel economy of the vehicle, but need room for their kids.

Daimler will continue assembling the two-passenger Smart at its plant in Hambach, France, while the four-seat version, which will share its architecture with a Renault subcompact, will come from a Renault plant in Slovenia.

“This partnership is terrific news for Smart enthusiasts in the U.S.,” said Jill Lajdziak, president of Smart USA, the independent distributor for the cars here. “We are really excited for the opportunity to grow our product portfolio in the coming years and offer consumers more choices when it comes to buying a Smart. The Smart brand has a ‘wow' factor that is unique in the automotive industry, and this is a chance to further capitalize on that.”

While no hints have been given yet as to what the new models might look like, dealers say they hope the vehicles will retain the unique bubble shape of the current Smart ForTwo.

Expansion of the Smart line is crucial to the brand's continuing success, especially in the U.S. market, said George Peterson, president of the California-based marketing/consulting firm AutoPacific.

“It's now a very purpose-built, small, cute city car that has little demand outside densely populated areas,” he said. “They do need additional models because the two-seater is a hard sell right now.”

When they're rolled out in 2013, the Smart vehicles will be available with electric drive, as well as gasoline engines, using technology similar to what Nissan is using in the Leaf electric car that goes on sale in December in Tennessee and four Western states. Texas and the rest of the nation will get the Leaf sometime in 2011.

Nissan will build a lithium-ion battery plant adjacent to its Nashville-area plant and will begin assembling the batteries and the Leaf cars at that facility beginning in 2012. There is no word yet whether any of the Tennessee-built batteries would be used in Daimler electric vehicles, including the Smart, but Nissan has said the plant will have enough capacity to provide batteries to other automakers.

Renault will provide three- and four-cylinder gasoline and diesel engines to Daimler for use in the Smart cars as well as in some compact Mercedes vehicles, while Daimler will reciprocate with four- and six-cylinder gasoline and diesel engines for Infiniti luxury vehicles, the companies said.

Daimler said its main goal in joining forces with Nissan-Renault is to find ways to make small cars profitably — which has eluded not only Daimler, but the American automakers as well. But it's something that Renault and Nissan are quite good at.

Daimler introduced the Smart in Europe more than a decade ago, but it has yet to make a profit on it. U.S. sales began in mid-2007.

“Right away, we are strengthening our competitiveness in the small- and compact-car segments,” Daimler Chairman Dieter Zetsche said in announcing the alliance.

But he said the automakers would make sure that the vehicles they develop together remain true to their own brands.

“Individual brand identities will remain unaffected,” he said.

Where the marriage between Chrysler and Daimler proved to be a disaster, this collaboration could work, Peterson said.

“It really appears that they're trying to find a way to make small cars more efficiently, although the thrust is more for Europe than the U.S.,” he said. “Except for the Smart, which probably will be the first brand here to benefit.”

But Mercedes could make a case for bringing some smaller, more fuel-efficient premium vehicles to the United States using technology developed by the alliance, he said. The smallest Mercedes now in the U.S. market is the compact “C” class, but the automaker has even smaller “B” and “A” class subcompacts in Europe and other markets.

While diesel engines are among the products the alliance will share, analysts don't expect to see any of those offered in affordable mass-market cars in the United States. They're expected to be limited to the luxury brands, Mercedes and Infiniti.

“The big impediment here with diesels is the cost,” said Jeremy Anwyl, CEO and chief market analyst for Edmunds.com, the consumer automotive Web site. “Are people willing to pay a premium? On a small car, that premium can be substantial. The diesels sold here tend to be on higher-end cars.”

Emissions standards for diesels are stricter in the United States than in Europe, which makes them more expensive here, he said. Volkswagen offers diesels here in its compact Golf and Jetta lines, but those begin in the mid-$20,000s.

Current diesel-powered Mercedes and BMW luxury vehicles begin around $50,000. That price would work for an Infiniti diesel, but not for a less expensive brand, the analysts said.

Collaboration on light commercial vehicles will be one of the first visible results of the alliance, the companies said.

Mercedes will offer a new entry-level commercial van beginning in 2012, based on a Renault design and assembled in Renault's plant in Maubeuge, France. Also, Mercedes will use a small diesel from Renault-Nissan in its midsize Vito commercial van.

Neither of those vehicles is sold in the United States now, but if they should be introduced here, they could be built at Nissan's Canton, Miss., plant, or in Mercedes' own plant near Tuscaloosa, Ala. Canton would be the more likely spot, though, because Nissan will assemble its own commercial vehicles there, based on the same designs.

The three companies will take small equity stakes in each other as part of the alliance, up to 3.1 percent of outstanding stock. But there are no plans for increases in cross-ownership, they emphasized.

Despite Daimler's previous missteps in alliances with Chrysler and Japan's Mitsubishi, the collaboration with Nissan and Renault could prove to be a success, Anwyl said, particularly if it remains concentrated on “the sharing of platforms and technology.”